Breakingviews

Luxury groups should focus their FOMO on Iran

April 25, 2016

With $32.6 bln of frozen offshore cash to be repatriated post-sanctions and GDP to grow 6 pct next year, Tehran can be a magnet for high-end consumption. A lack of infrastructure and political volatility are reasons to hesitate. Offsetting that is the risk of missing out.

YSL adds to unhappy trend of big designer exits

April 1, 2016

Hedi Slimane is leaving the luxury house after four years. It’s a setback for one of French group Kering’s fastest-growing labels. Losing the odd creative is no crisis, but with recent exits at Dior, Gucci and Lanvin, retaining talent could drag on profitability. 

Burberry bid would be an extravagance

March 8, 2016

The trench-coat maker is the subject of takeover speculation but a deal, which could cost 8 bln pounds, doesn’t stack up. Its stock isn’t particularly cheap and costs are already lean. With the luxury sector deteriorating, it’s not clear a new owner could halt slowing sales.

Gucci gives sneak preview of life after turnaround

February 19, 2016

Kering’s most important luxury brand beat sales estimates in the fourth quarter, the result of more desirable products and a slick advertising campaign. It looks to be putting three years of bumpy growth behind it. Yet falling operating profit margins will continue to drag on the valuation.

Luxury groups could shrink their way to riches

December 30, 2015

Labels like Prada and LVMH have spent a decade expanding like crazy to meet emerging market demand. Burberry has tripled its store base. It’s time to go the other way. While cutting back will be painful, it could spur higher luxury valuations. Hermes is one that has it right.

Savoy and Plaza sale means trophies for all

December 9, 2015

Accor is buying the owner of the luxury London and New York hotels for $2.9 bln from its Saudi and Qatari investors. Adding higher-end lodging may help the French group make its online booking system more competitive. The price, however, looks too high to create much value.

Burberry poorly dressed for luxury’s chill winds

October 15, 2015

The British fashion label’s sales disappointed in the first half. It is highly exposed to Hong Kong and China, and scantily represented in Japan where Chinese tourists now shop. The U.S. is stormy too. Cost cuts help, but Burberry may just have its stores in the wrong places.

Yoox glee at Net-a-Porter exit may wear thin

September 3, 2015

Shares in the upmarket online retailer popped 5 pct as Net’s founder cashed out of the merger agreed in March. Terms of the severance deal with Natalie Massenet confirm that Yoox bought its rival at a bargain price. But it is losing know-how at an important time.

LVMH’s bite out of Apple is digital coming-of-age

September 2, 2015

The French luxury group has poached a top Apple music executive to head its online operations. It’s a significant move in a sector that has been wary of the net. It also cranks up the heat on the sector’s e-commerce leader Burberry and recently merged Yoox/Net-a-Porter.

Luxury faces tough quest for next big market

August 27, 2015

China’s slowdown and weaker currency have hit share prices of bauble-peddlers LVMH and Swatch. The hunt is on for luxury’s next hotspot. India and Brazil show promise, but a mix of scale, rising incomes and inequality is elusive. Better opportunities may be closer to home.